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tv   First Business  FOX  November 1, 2012 4:00am-4:30am PDT

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sectors that are still feeling effects of the massive storm. in today's cover story, one of new york's busiest airports is expected to be up and running today. how airlines are dealing with serious delays. plus, disney takes over star wars. who could benefit most from the $4-billion deal? and, bonds are rising in popularity. but one money manager has a word of warning. first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning, it's thursday, november 1st. i'm angela miles. in today's first look: it's still stormy on wall street, only this time it was investors running for cover as they sold stocks and bought gold in the first trading session after a 2-day shutdown
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due to superstorm sandy. in the end, october had some wicked moments for investors, leaving the dow down 2.5% and the s&p 500 off 2%, while the nasdaq lost 4.5%. and employment figures from adp for september were revised down, showing 88,200 jobs were added verus the 162,000 originally reported. this is just a test. the people at research in motion are testing the new blackberry 10 smartphones with 50 carriers around the world. even though it was a down day yesterday, todd horowitz of average joe options joins us. todd, i have to tell you, it was good to see those traders back on the trading floor. what was your impression of that trade? > > good morning. it was nice to be back. it was nice to be back in action. however, the trade was very slow and very dull, and we're still trying to figure out, we're trying to make sure that all the systems were working properly, and there is
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a lot of news coming out today and tomorrow with the adp jobs today and the regular jobs report tomorrow. so, it figured to be a little slow yesterday anyway. > > we had a surprise with that adp number. what do you anticipate for the jobs number, and how are you positioning? > > i am positioning neutral. i think the market itself needs a bit of a solve, we need a little bit of a correction. i think that the market itself, the number has been kind of out of whack the last couple of months. it's really hard to get a real handle on what's happening. i think the street expects the number to be pretty good, because the market has held up fairly well at the upper levels of this latest trading band at 1400 in the s&p level. so i think the street expects a good number. i think the number will be ok. i think it's going to be ok going into the election. so, we'll see. but we know that real unemployment is still fairly high and there's something that needs to be done about that. as far as the election, do you expect there will be some sort of unleashing of money after the election? > > i don't. i think that what you'll see is an obama victory will be met with a small rally
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followed by some selling, and a romney victory will be met with some buying. but i think that the money is going to stay held tightly in hand, because right now most people are still trading ben bernanke and the fed and the money-printing system, and we know that in the long run that's not a great system to be trading. so better to be in cash than to try and case for yield in a field where you can't really find true answers yet. > > but at least the economy is still clicking. good to have you on the show this morning, todd. take care. > > thank you so much. have a great day. some airlines have resumed limited service to some of new york's airports, but some have not, and it's leaving some passengers, especially business travelers, up in the air. in our cover story, the reasons your meetings may be cancelled are underwater at the end of a runway. airlines hope to resume flights to new york's laguardia airport thursday afternoon. limited service returned to jfk and newark wednesday. "the first thing i'd tell a business traveller is call a travel agent who can get you through some of the ins and outs during this time. one of
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the challenges is the repositioning of jets to ny. they have to bring them back in." american airlines extended its rebooking period on storm- affected tickets without penalty through december 20th instead of the usual one-week or refunds if a flight was cancelled. but customers on united have only until november 9th to reschedule. new york's subway system suffered the worst damage in its 108-year history when floodwaters poured into the subway just as they cascaded into roadway and rail tunnels. "getting water out of the tunnels is the main business right now." sandy's path of destruction included 100 homes destroyed or heavily-damaged when fire jumped from house to house in the breezy point neighborhood of queens. entire homes along the jersey shore were swept off their foundations. and emergency crews patrolled flooded streets in hoboken. as lives and businesses clean up and resume, some industries may
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bounce back more easily than others. "no mistake, this will put a dent in third-quarter earnings for the airlines, but fuel is also low at $85 a barrel and demand has been strong." the website lists newark's liberty international with the most cancellations thursday, mostly among express jet and jet blue. united airlines reports it is still assessing "some facility damage" in newark. despite the traffic snarl awaiting the airlines today, a couple of airline stocks soared wednesday. spirit air climbed 4% during the session after the company topped revenue expectations. u.s. airways, a major carrier to the east coast, rallied more than 2%. shares of generator maker genrac ramped up 20% to an all-time high and continued to ade higher in the after hour session. generac also revealed revenues increased 26% in the
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third quarter. home depot and lowes both rallied after customers on the east coast stocked up on home repair products, while most insurance stocks sold off. the u.s. is quickly approaching its debt limit. that's according to the treasury department, which said this week that the u.s. will hit its debt limit of $16.4 trillion by the end of the year. the treasury has granted congress more time to come to an agreement over the debt - until early next year. the government is already under pressure to avoid the year-end fiscal cliff. last year's debt negotiations in congress resulted in a decision to raise the debt ceiling, along with a lowered credit rating from standard and poors. u.s. automakers are setting a new pace to deal with a slowdown in europe. ford and gm reported better-than-expected profits this week as north american sales helped boost revenue while european demand dropped. gm is looking to save $500 million in the next couple years as it restructures in that region. the automaker says it has cut 2,300 jobs in europe and wants to cut 300 more. ford is also restructuring by eliminating 5,700 workers in the uk and
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europe. "europe has been on the brink for awhile now. but it doesn't seem to be really impacting u.s. sales and north america remains a very profitable wing for most of these automakers worldwide. so europe is slumping and slowly but surely automakers are starting to remove capacity from that region and that should help them deal with it in the long run." that was kelsey may of ford and gm both expect to lose money in the eurozone. ford sees losses topping $1 billion. gm says it could lose as much as $1.8 billion. 18.5 million. that's the number of europeans who are currently unemployed. the region's jobless rate hit an all-time high in september of 11.6%. 146,000 people lost their jobs in the last month. spain and greece have the highest unemployment rates - both hover
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around 25%. young people have been hit the hardest - 3.5 million young people under the age of 25 are out of work. jpmorgan is still chasing down employees involved in the bank's massive $6-billion trading loss. reports say jpmorgan is suing the man who supervised "bruno iksill," the trader known as the london whale. iksill is said to be responsible for taking supersized positions in deravitives that led to multi-billion losses this year for jpmorgan. his boss, javier martin artajo, is now being sued in a british court by the bank. facebook is feeling the post- lock-up pinch and slipped a little. about 229 millon shares expired this week, giving faceboook employees the right to sell their stock as part of an agreement after facebook's ipo. but when the market opened for trading wednesday, the stock dropped nearly 4%. another 804 million shares expire in mid-
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november, about 156 million in mid-december and 47 million more next may. it's not all bad - the stock is still up nearly 10% from just before facebook's third-quarter earnings report. facebook shares closed at $21.11. a deal in the fashion industry will give the pvh corporation full control of the calvin klien brand. pvh is buying warnaco group for nearly $3 billion. pvh already owns tommy hilfiger, along with the design and product development for calvin klien brands. warnaco holds the licensing agreements for the calvin klien jeans and underwear divisions. now pvh will fully control calvin klien, tommy, as well as its izod, geoffrey beene, kenneth cole other brands. the latest third-quarter earnings to hit the market were mostly in the black. the odd one out is barclays, which posted a loss ahead of two new investigations into trading. hyatt hotels' higher third- quarter net income was due to recent hotel buys in the u.s. and mexico and renovations to current properties. clorox was up on price increases on its products, and garmin had higher profits on reduced costs and sales increases in its mapping products.
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still to come, disney is buying the star wars franchise. find out who emerges as the big winner in the deal later on. but first, investors are running to bonds as a safe play. but there are some hidden risks you need to know. that's next.
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carl icahn has an eye on netflix. his hedge fund acquired a 10% stake in the company. netflix shares shot up nearly 14% to $79.24 on the news. according to reports, the famous investor held talks with netflix about larger stakes. he said the company's video streaming and international project could make it an even bigger player in the industry. icahn told bloomberg news that netflix has the best platform for growth in tablet computers and so-called smart televisions. a record amount of money is going into the bond market. bond sales this year are already topping $3 trillion. larry short, a portfolio manager with dwm securities, joins us via skype this morning. good morning larry. what has investors rushing to bonds? > > a number of factors are causing investors to look at bonds. first of all, generally
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speaking, investors tend to buy the sector that has gone up the most, and in the last number of years, and particularly the last 18 months, bond funds, long-term bond funds, have gone up more than anything else. so people are attracted to that because they believe that the recent trend will continue. in addition to that, there's a perception that bond funds are safe, and that may be to their detriment. > > are bonds the safest play in this current environment still? > > i don't believe so. long- term bonds, most of the gains that we have seen in there have been capital gains. we have to understand that when interest rates fall - and we're talking long-term interest rates - fall, long-term bonds will rise in value. but the opposite will also occur. so we're in an environment where long-term interest rates are, if they're not at record lows as we speak, they're pretty close to record lows, and you have central banks around the world - in the u.s. as well as other places - trying to reflate, trying to cause growth to happen. and when
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growth arises, interest rates rise. so you're betting against some of the most powerful central banks in the world by buying long-term bonds. > > what are you recommending to clients? > > if the client wishes to stay with bonds, then you move to the shorter end, that is the one-to-five-year area. they still could be affected to some degree if interest rates rise. and again, this would be long- term interest rates rising. but they certainly wouldn't be hurt as much as long-term bonds. there was a study i saw recently which indicated that if we get a 1% interest rate increase in long-term bonds, we potentially could get a fall in long-term treasuries of between 9 and 13%. and i don't think that bond holders are really expecting that to happen. so, that's if somebody wishes to stay with bonds. however, we believe that the overall stock markets are posied to start an upward swing within the next three to five months, and that would cause us to be biased more toward the stock market than toward bonds. > > interesting. larry short of dwm securities. thank you larry. > > my pleasure. still ahead, disney is venturing into a new galaxy. find out more next in movies and money.
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some star wars fans are drawing their light sabers over news that disney is buying the lucasfilm company for $4 billion, which includes the star wars franchise. our movie man, erik childress, is here with the details on the deal. good morning to you. > > good morning. > > is this a good deal? > > i think this is a great deal. it almost seems like a bargain for disney, $4 billion going to george lucas for the
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rights to all the "star wars" films? the "star wars" franchise, the six movies that have come out so far, have grossed $4.4 billion worldwide. so, now they get to make three, six more, however many they're going to make, and make a ton more money. > > but fans are very concerned about this maybe diluting the franchise. what do you think? > > people are already up in arms. they're really not very happy with the prequels that came out. so they're already glass-half-empty about it. but i think it's going to go in the right direction. lucas is going to take a little step back. he's going to let new directors, probably fresh directors, take this in a new direction. and i think, i'm hoping people are going to be very happy with them. > > and what about george lucas? he says he's doing this because he wants to retire at 60, which i think is very young. but he's been very wise in the movie industry. > > maybe one of the wisest decisions in financial history in movie-making. back 35 years ago when he made "star wars," he gave up all the rights to a lot of his salary and points on the release of the movie just to take the sequel rights and all the merchandising rights.
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and what do you know, $4 billion later... > > smart move. let's talk about what happened at the box office last weekend. of course, some people were evacuating because of the hurricane. what do you think it did to the numbers ultimately? > > i don't think it had a great impact on the numbers, because the final weekend in october has traditionally not been a very big moviegoing weekend, with the exception of a horror film like the "saw" franchise or "paranormal activity" tends to draw some people in. but generally it's just not that big a weekend. > > "argo" came in no. 1. a lot of that might have been word of mouth. > > it's definitely word of mouth. > > it's a good film. > > it's only the ninth film since 1996 to jump up to no. 1 after being out in release for a few weeks. > > that comes in at $12 million. "cloud atlas" at $9 million. "hotel transylvania" at $9 million. "paranormal activity," $8 million. "silent hill" at $8 million. coming up this weekend, "flight." but it's only on 1800 screens. what's up with that? > > i'm kind of surprised that paramount is not getting a wider lunch for this movie, because it's very critically acclaimed, they've been advertising it very heavily-
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> > you liked it. > > oh, i think it's an excellent film. especially for adults. but it's on fewer screens than "cloud atlas." but i think when you see the numbers this week, it's going to have a very high per- screen average, and probably going to do very well. > > also coming up this weekend, "the man with the iron fists," which did not screen, and "wreck-it ralph," which you did see and loved. > > really funny movie from disney animation studios. should be a very easy number one this weekend, probably to the tune of over $40 million at least. so you have something for the kids this weekend and something for adults. everyone should just go out to the movies. > > i'm looking forward to having you back next week. you'll be talking about "lincoln" and "bond." > > two more of the best movies of the year. > > two winners. good to have you on the show today. that's erik childress. thanks for coming on. still ahead, with so much talk about what star wars could mean to disney's bottom line, is now the time to buy stock in the magic kingdom company? chart talk is coming up.
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matt cavanaugh of cmz trading joins us now with a closer look at disney. good morning to you. a lot of people are saying that disney just got a great deal by buying lucasfilm. do you agree with that? > > i do. i think it is a good deal for disney. it's one of the best entertainment companies in the world. they have multiple venues to really expand on all the products that they're gaining in buying lucasfilm - the "star wars" franchise, the "indiana jones" franchise. and you know if there's going to be a company that's going to be able to squeeze value out of this, they are the ones to do it. i think it's going to end up being a great deal for them. > > why did the stock sell off then? > > you know, they are issuing 40 million shares to help pay for this deal, so i think it's a mixture of that, and it's also, the stock did break a key support level. i think it's really important for the stock to hold the $47, $48 handle. but i think if you go out a few years and look back, i think you're going to see that this ended up being a really good deal for disney. > > would you be a buyer of the stock? > > you know, i would be a buyer. i'm going to wait and see what happens in the election season, kind of wait and hold
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off adding some new positions. but yes, $48, maybe even a little bit lower, i think that's a good buy for disney. > > what do you think about the overall market action yesterday, especially with the vix? what is the vix telling us? > > well, yesterday we kind of had a slow day in the market, but the vix really creeped up. it was up almost 4%, a little bit over 4%. i think there's a few things at play here. number one, we've got a week with a lot of big numbers: ism, adp unemployment, vehicle sales friday. also the unemployment number. also, don't discount the trading firms that aren't sitting at their desks in new york that would maybe trade this one way or another if it gets out of line. but, the big kicker is, we have an election, so coming into this election, you're going to see a lot of speculation and a lot of nervousness. > > how are you going to handle today with so much data coming into the market today, and then you have that jobs number on friday as you mentioned. how do you deal with that as a trader? > > right now we feel like the market is pretty flighty, pretty flaky. it's having some pretty big moves without going anywhere. so the goal is to
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just stay nimble, stay quick, and try to take advantage of the movement. > > stay on those toes. that's matt cavanaugh of cmz trading. thanks matt. > > thank you. that's a wrap for this thursday. traders unplugged is coming your way tomorrow, and the traders are coming unglued over fracking and unempoyment. don't miss it. from all of us at first business, thank you for watching and have a great day!
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. rain hits the bay area, how long will it last and how it will hit your morning commute. it hits the dream season in this community. watch out for sandy, the historic community which may never be restored, it is all ahead on the ktvu channel 2 morning news. good morning everybody, it is friday is eve november 1, yes first day of november, all
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right, we got a little soaked but you said get out early. >> i had some areas that didn't see rain until midnight. >> north bay we said get out early, but that's what decided with this system, it is just kind of hanging out and it is weak now but look for a cloudy morning with light rain and look for 50s and 60s and we have more coming up in about five hours. hello steve. it is raining as you have mentioned and looking at a live picture between walnut creek and also on the oakland side as well. this morning's commute is moving along well on interstate 880 and it is wet but we will have to slow it down. let's go to tara moriarty who is live in san francisco, looking at the
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